If Winston Churchill’s observation that “the optimist sees the opportunity in every difficulty” still holds, then upbeat treasury leaders possess especially sharp vision these days.

Corporate treasury functions are contending with a raft of regulatory demands
and technological disruptions at the same
time the broader economy is characterized by rising interest rates, Brexit, and
other macroeconomic disturbances. Despite formidable volatility, most treasury
executives who participated in the “2018
Cash Management Survey” from Treasury
& Risk see their organization’s cash
reserves holding steady or increasing
during the next 12 months. (See Figure 1,
below.) Nearly 30 percent of respondents
expect cash reserves to rise by more than
10 percent.

Those projections are notably higher
than the cash reserve changes that survey
respondents say occurred within their
companies during the past year: Only 15
percent of organizations increased cash
reserves by more than 10 percent over the
past 12 months. “These responses demonstrate that companies are very optimistic about the economy and about their
prospects for a higher level of cash,” says
Michael Berkowitz, Citi’s North America
and global product head of liquidity
management services.

Projected boosts to operating cash
flows mark the most influential factor
on cash reserve changes in the coming
year, followed by reductions in capital
expenditures and merger-and-acquisi-tion (M&A) activity. The ongoing impact
of the U.S. Tax Cuts and Jobs Act (TCJA)
remains a formidable factor, cited as
having an impact by 22 percent of respondents who expect cash stockpiles to

Optimism OverridesVolatilityHow do you expect your organization’s cash reserves tochange in size over the next year?Over the next year, which of these factors do you expect tohave the most impact on your company’s cash reserves?Figure 1: Changes to Cash Reserves 2018–2019